Index’s Saul Klein Swaps Cold London Streets For Israeli Beaches

The following dispatch was originally published on sister blog Tech Europe:

WSJ

Index Ventures’ Saul Klein works in Herzilya where he says 80% to 90% of Israel’s VC community is withing a 10-minute walk.

It’s not too hard to see why Index Ventures Partner Saul Klein has based himself in the Israeli town of Herzilya. It isn’t because of the glorious beach, the permanent sun, nor the traditional Israeli breakfast of Shakshuka that we share sitting under the shade from the beating Mediterranean sun.

It is because, he says, some 80-90 percent of Israel’s thriving VC community is within a 10-minute walk.

“See that building there,” he says pointing to a modern block on the other side of the road (the beach side) to Benedicts where we are having our breakfast. “There are two VCs in that building alone. Sequoia Capital and Lightspeed.

“Over there in that direction,” he gesticulates across a car park, “two or three of the best entrepreneurs turned angels work out of a restaurant over there. It is all here.”

As a VC who spends his time between Israel, London and the U.S., few people are better placed than Klein to comment on what makes Israel unique.

“This is a start-up nation. The country itself, in its present form, is only 60 years old, yet the country has one of the most sophisticated tech ecosystems on the planet.”

Israel’s success, says Klein, is built on many things. Firstly there is the geo-politics. If you are surrounded, he says, and you don’t have a huge amount of natural resources, you have to develop, and quickly.

Then there is the unique role of the Israeli Defense Forces. As we ate breakfast, on the table next to us was a young Israeli woman dressed in her fatigues. The IDF’s intelligence unit, 8200, is credited with acting almost as a networking event. It creams off the very top of the conscripts and puts them to work on the hardest problems.

“What people may not realize,” says Klein, “is just how big it is. It is bigger than the Israeli Navy. And Israel has a lot of coast.”

But a lot of it has to do with Israel’s view of the world and its position in it.

What Israeli companies share with many in Europe is the lack of a home market, he says. “They have to be global from the start.” Israel has a population smaller than London, not enough to support the tech it produces. It has to produce global companies.

What is certainly true is that Israel spends way more on R&D than most other nations, and has more VC per head than Europe. However Klein is not convinced it is access to cash that differentiates. An entrepreneurial attitude among Israelis could be a bigger factor, he suggests.

About Venture Capital Dispatch

Produced by the editors of Dow Jones VentureWire, Venture Capital Dispatch tracks the fast-moving developments at the intersection of high-tech innovation and venture capital finance. Featuring the VentureWire reporting team in the Silicon Valley, New York, Boston and Shanghai tech centers, Venture Capital Dispatch provides insight into the newest start-ups and latest trends in venture capital investing. Write us at VCdispatch@dowjones.com. For more information on Dow Jones products covering venture capital and other financial markets, go to http://pevc.dowjones.com.